Senior Living Investment Brokerage, Inc. is frequently asked if now is the right time to sell assisted living and nursing home assets. Most owners are aware the market is favorable for Sellers, but few actually know their current value. Senior Living Investment Brokerage’s biggest challenge is not convincing owners that the time is right to sell, rather it is getting an audience with them to put together a confidential proposal that determines the value of their assisted living community or nursing home . The M&A market and market indicators make a strong case.
The assisted living market is very aggressive right now. Pricing and deal volume is at an all-time high. Early indication is that July could be another record month. When looking at Seniors Housing, characterized as assisted living/memory care and independent living, pricing has increased significantly over the past few years. According to the Senior Care Acquisition Report, 20th Edition, published by Irving Levin Associates, the average price per unit increased from just over $100,000 per unit to around $200,000 per unit in the last five years. Low cost of capital and significant demand for Seniors Housing, in addition to aging demographics, has caused pricing to skyrocket in a short period of time. Institutional capital is turning to Seniors Housing as a resilient segment to put their money to work. In addition, many regional companies are well capitalized with multiple debt and equity sources to make strategic acquisitions.
How long will it last? Will overbuilding hurt occupancy and the market/values? Will an increase in interest rates hurt values and activity? Please contact Ryan Saul to discuss the current market and how Senior Living Investment Brokerage, Inc. can help.
Deciding when to sell your assisted living facility (Independent Living Community or skilled nursing facility) can be a daunting task and there are many factors to consider. However, once an owner decides to sell, typically they want to close as quick as possible. As a company, Senior Living Investment Brokerage, Inc has sold more senior living and skilled nursing facilities than any other brokerage company over the past seven years. Over the years, we have found a number of things an owner can do to help sell their senior housing community faster, below is a list of the top six (3 will be in this blog and 3 will be in a future blog post):
- Price the community reasonably – Of all the things an owner can do to sell their senior housing community quickly, pricing it reasonably is the most important. Overpriced properties do not sell. They tend to sit on the market for months as buyers do a quick analysis and pass. Eventually, the seller drops their price to a reasonable market price. Unfortunately, many buyers will not go back and re-look at the property or they wonder if the sell will have additional price drops. Effectively the property becomes a stigmatized property. Financially qualified buyers tend to be smart and know the market well. They purchase properties that make financial sense and don’t get persuaded emotionally. Over pricing a property in hopes to “get lucky” and find a buyer that will pay the higher price rarely works and usually ends up wasting time and often times can result in a lower price than if the seller priced the property reasonably from the beginning.
- Hire an experienced brokerage company – An experienced broker can help a seller price the property reasonably. It is important to make sure the brokerage company has a team of brokers that work together as a team to contact hundreds of potential buyers across the country quickly. Additionally, most owners want a confidential sale of the seniors housing community and many brokers do not do a good job of this.
- Talk to an attorney and accountant ahead of time – Owners should talk to their accountant before the marketing process starts to make sure they understand the tax implications of the sale and decide if they want to consider a 1031 Exchange. Additionally, it is very important for a buyer to be working with an attorney who has specific experience in health care real estate sales. Most brokers can recommend a good attorney if an owner does not already know one. If an owner waits until offers start to come in to talk to their accountant and retain an attorney, it can slow down the process and make the seller look very inexperienced.
For more information on selling your seniors housing property, please contact Jason Punzel at 630-858-2501 x 233 or firstname.lastname@example.org.